PROPORTIONALITY, BUNDLES AND £3 MILLION SPENT ON COSTS: FAMILY COURT ON PROFLIGATE EXPENDITURE
We have looked at the family courts from time to time in relation to procedure, costs and proportionality. Another example is provided by the judgment of Mr Justice Holman in the case of Gray -v- Work [2015] EWHC 834 (Fam). Excessive bundles and profligate costs feature again.
THE CASE
The action concerned the wife’s application for financial remedies. The husband had, over the marriage, generated a great deal of wealth over a period of 8 years amounting to £144 million.
OBSERVATIONS ON COSTS AND THE BUNDLES
- Before, and during the course of, the hearing I have repeatedly urged the parties to settle their differences. As I have repeatedly pointed out to them, this should be the easiest of cases to settle. There is plenty of available capital and liquidity is not a significant issue. The case is, and particularly was at the outset of the hearing, pregnant with litigation risk for both sides. Further, a huge advantage of a carefully negotiated settlement would be that there could be a carefully negotiated division and allocation of particular assets, from large portfolios in funds to individual works of modern art. Finally, a settlement would have given to the parties ownership of their agreed outcome and preserved their dignity. Instead, the hearing has been one of unedifying and destructive pugilism.
- I have been told that there have been attempts to settle, but of course I do not know, and can never be told, how much divides them. I only know that the husband has not budged on his open offer of $5,000,000 (all of it already her own assets) and not, as I understand it, a penny more. Since the introduction of the modern rule in Family Procedure Rules, rule 9.28, the respondent is required to make an open proposal which clearly must be a genuine one, and it is on the fairness of that open offer and proposal that his reasonableness will be judged.
- Prior to the hearing I notified both sides that I provisionally thought I should hear this case in public. All counsel attended in robes, and there was no suggestion by or on behalf of either party that I should not hear it in public. My reasons are broadly similar to those which I expressed inLuckwell v Limata [2014] EWHC 502 (Fam), at paragraphs 2-5, which I incorporate by reference into this judgment but will not repeat. Press have attended most of the hearing. They have agreed not to mention in any report the names of the parties’ two children, nor the schools they attend, nor the actual address of the home in Kensington, and I am confident that I can rely on their integrity in that regard.
- The parties have spent approaching £3,000,000 on legal fees and associated expenditure. For that, you get very high quality legal teams, and each of them has been very well represented, but it does not appear to have facilitated a conciliatory outcome to this case.
- Further, some of the spending has been, in my view, profligate and unnecessary. Ordinary people litigating in the family courts about very serious issues, such as whether their children should be adopted or returned from care or whether life support of a child should be maintained or ended, do not have the luxury of, nor, frankly, the need for, two shorthand writers in court throughout the hearing, producing overnight transcripts to which negligible reference was later made. It is an extravagance. Whilst it was a privilege to hear from two Texan matrimonial lawyers, I do not think the cost of their travel and attendance was justifiable or necessary.
- The bundles were excessive and proved inconvenient for me, for witnesses who struggled with them in the witness box, and at least at one stage for Mr Howard QC. At one point we had the absurdity of going to one bundle for a letter and another bundle for the reply. There was a pre-trial hearing before a circuit judge on 3rd December 2014. He had no other involvement in the case either before or after that day. Amongst many other directions, he did formally give “permission for the trial bundle to be extended to six lever arch files…” I asked Mr Tim Bishop QC, who appeared on behalf of the wife, and who was present on 3rd December 2014, whether the circuit judge had exercised his own independent discretion in agreeing to six bundles, or whether he had been seduced by counsel. Mr Bishop immediately and frankly said that the judge had been seduced by counsel and that it was not an independent assessment by the judge. It was rubber stamped. This is not how the very important Practice Direction 27A is intended to be applied. Further, the cardinal and over arching words of the practice direction are the opening words of paragraph 4.1: “The bundle shall contain copies of only those documents which are relevant to the hearing and which it is necessary for the court to read or which will actually be referred to during the hearing …” However many bundles the court may authorise, there should be no document within them which does not fall within that rubric in paragraph 4.1. I have not kept a tally in the present case, but I am confident that the total number of documents read or referred to is less than half the total of well over two thousand pages assembled in the bundles.
- In his judgment in L (a child) [2015] EWFC 15, handed down last week, the President of the Family Division has given due and crystal clear warning that these excesses will no longer be tolerated. What I wish to emphasise is that although that judgment related to care proceedings, every single word of the relevant part of it applies no less, and arguably more, to financial remedy proceedings.
THE OUTCOME
As civil litigators our interest in the case ends there. However read to the end if you are curious as:
- How so much money was made (working in private equity).
- How much the wife received (about half)
- Whether the husband was found to be a “genius” (he was not, but was in the right place and the right time).
- Whether you should have gone into private equity rather than studied law (definitely if your major priority in life is to make money).